By Alexandra Alper

WASHINGTON (Reuters) - A top Republican lawmaker on Tuesday asked the financial industry to suggest alternatives to the hotly debated Volcker rule in advance of a planned fall hearing.

Representative Spencer Bachus urged investors and market players to submit ideas to the House of Representatives Financial Services Committee before September 7, saying that the rule as currently proposed would have a "devastating" impact on the U.S. economy.

"We must consider legislative alternatives that will not stifle economic growth and job creation," Bachus, who is the committee chairman, said in a statement.

The Volcker rule was mandated by the 2010 Dodd-Frank Financial Reform law to prevent banks that receive government backstops like deposit insurance from making risky trades that could endanger taxpayer and depositor funds.

The rule, which was named for former Federal Reserve Chairman Paul Volcker, also restricts banking investments in hedge funds and private equity funds.

A proposed Volcker rule was released in October and a final rule is expected in the next few months.

New legislation to replace the Dodd-Frank provision that mandates the Volcker rule is unlikely to pass a divided Congress in the lead-up to presidential elections.

(Reporting By Alexandra Alper; Editing by Leslie Adler)